Originally Posted on Franchising.com

Experienced franchisee Hemant Patel knew what he wanted and waited for it to come on the market. He ate his first meal at Cilantro Taco Grill about 10 years ago and was hooked on the flavors. As he traveled throughout greater Chicago, the restaurant was everywhere. Three or four years ago, he asked the owners if they were ready to start franchising.

“They said, ‘No, we don’t have the time right now,’” says Patel, who owns 11 Subway locations, nine ampm gas stations, and one Checkers & Rally’s location in Illinois.

He was willing to wait for Cilantro Taco Grill because the emerging brand had so many positives going for it. “I want to be part of some kind of authentic food. That means there is no fusion,” he says. “Another thing is it’s a new brand, so there is a potential to grow.”

Working with an established brand like Subway has its positives, including a long and proven history of profitability and high name recognition. “Subway is also very good at negotiating prices with the food vendors and equipment vendors, but they are bigger,” Patel says. “They can leverage. They can negotiate a very nice price.”

Patel says Cilantro Taco Grill excels in other ways. For instance, he has no restrictions on growing his portfolio. He plans to open 10 to 15 locations. The first is under construction in Sugar Grove, Illinois. “With an established brand, there is no potential for growth because they are everywhere,” he says.

Patel and others are willing to accept some risk if it means getting in on the ground floor of an emerging brand. A history of solid financial results from corporate stores, the vision of those in the C-Suite, and the support of the team are important factors when signing with an emerging brand. In addition, franchise fees are often lower for newer brands than for established brands.

Another positive factor can’t be dismissed: Franchisees of emerging brands often have a passion for the product or service offered, propelling them through initial contact, due diligence, discovery day, and signing.

“If it’s a product you already believe in, it’s a product you find easy to sell,” Patel says. “You’re not a weird person, right? If you like eating this food, then obviously somebody else is going to like eating this food. Then it comes down to delivering the brand promise to the customers who come visit.”

A native of India, Patel appreciates the fact that the owners of Cilantro Taco Grill, Temoc Morfin and Armando “Pitbull” Pérez, are immigrants who came to the U.S. to build better lives for themselves and their families. He’s also impressed by how they’ve overcome numerous business challenges and streamlined operations for franchisees.

“They have a pretty good knowledge of running the restaurant, and that’s what I like,’” he says. 

Cilantro Taco Grill helps with social media and other marketing. Patel can also rely on his years of experience as a restaurant operator to get the word out to potential customers. Since he’s already an established businessman in the area, he has connections with economic development professionals and city officials. 

“I have to put in the effort that I know how to do,” he says, “and I’m going to do that because I like that product, and I think people are going to like it also.”

Taking the leap

California-based Casey Furtado says he loved his time as a teacher, but an opportunity cropped up that he had to take seriously. In the wake of the Great Recession, job security was shaky. “Every year, it was like, ‘Hey, I don’t know if we’re going to have a spot for you in the teaching world,’” he recalls. “It was this interesting time when I was kind of looking at taking a risk. I was 28, and I was like, ‘Hey, if I’m going to take a risk, this is a good time to do it.’”

A friend recommended Apex Leadership Co., which helps schools raise money for bands, sports teams, and other programs. It also provides leadership courses for young people. Furtado discussed the opportunity with his mentors, and he got to know Scott Donnell, founder of Apex Leadership Co. Furtado described Donnell as an “awesome dude, real creative, very entrepreneurial. I had many conversations with him over about a six-month period of time.”

He asked for the company’s business statements to learn Apex’s income potential. He also studied the leadership programs and different fundraisers available. In hindsight, he says he should’ve asked about the cost per acquisition but didn’t think about it at the time.

He became the company’s first franchisee. It was a scary decision, but Furtado approached it as an opportunity to learn. “I tried to keep what people call a growth mindset, which is not looking at failures as failures but as opportunities to grow,” he says, adding that because Apex Leadership Co. was an emerging brand, it didn’t require a steep financial investment.

It helped that he and his partners had complementary skill sets. While he was comfortable with teaching students in the classroom, they took the lead in marketing, sales, and business development. Furtado opened his first Apex Leadership Co. in San Diego in 2013 and has since added another San Diego territory as well as California territories in East Bay, San Jose, and Inland Empire. Roles have evolved over the past 12 years, and now he’s focused on the overall business and working with managers and the sales team.

“We just were blessed in the fact that this is a really neat and unique business,” he says.

Furtado and his partners put their faith in the Apex team, and that’s paid off over the years. “The leadership team is great,” he says, “and the corporate office folks really want to know what we’re doing and how we’re doing it.”

As new operators joined the company, they developed into a mutual support group. “I remember 12 years ago when we sat in a tiny little conference room. There was, I think, five franchise owners at the time,” he says. “We all kind of came on board at the same time. We call it our summer training.”

Those meetings have continued as the number of franchisees has increased. Operators still get together to discuss challenges and opportunities. Furtado also provides support and guidance to new franchisees.

“It’s been a steep growth rate,” he says, “and now we are a good reference point for those people and provide training when they come on board.”

Something special

Zach Trujillo knows what it means to take a risk and make a big change. He and his partner moved from Utah to the Mississippi Gulf Coast because that’s where Crumbl Cookies had open territories. “We knew some people who ran some Crumbl stores. We said, ‘Let’s call them and see what their thoughts are,’” Trujillo says. “We called them, and they loved it. They loved the concept, loved the profitability, loved everything about it.”

The endorsement and Trujillo’s love for the tasty confections were enough to inspire the cross-country move. He and his partner opened stores in Gulfport and D’Iberville, Mississippi, and Slidell, Louisiana. “We’re all in for the adventure,” Trujillo says. “It’s worked out for us, and now we’re building more businesses down here.”

The cookies had enticed Trujillo to one business, so it made sense to follow his palette to Vicious Biscuit, an emerging restaurant brand specializing in serving new twists on Southern favorites. “The food is exciting, and it’s messy, and it’s delicious, and it’s Instagram-worthy, and it’s quality,” he says. “This was a fresh take.”

Though Vicious Biscuit was new to franchising, it had more than five years of data from operating corporate restaurants in South Carolina. “They’ve tested stores in every sort of market you can imagine: young professionals, older demographics, more urban, suburban,” he says. “They’ve tested it in a lot of different areas and put their work in to test the model. It’s been successful everywhere they put it.”

With Crumbl, Trujillo and his partner had their friend’s experience to rely on. This time, they got to know the corporate team at Vicious Biscuit to understand the company’s culture and long-term goals. “Everyone that we’ve met is a professional and knows what they’re talking about,” he says. “They answer our questions the day we ask. It’s just been an awesome experience.”

Before agreeing to join the team, they also talked with managers and employees who worked at the corporate stores. “Getting as much information from as many different areas as you can is super important,” he says. “Everybody loved to work there. They loved the food and loved the concept.”

Trujillo says Vicious Biscuit is taking a slow and methodical approach to growth, which he and his partner appreciate. As an emerging brand, the company is changing and innovating as it moves forward.

“Our kitchen is going to be a little bit more streamlined than the first kitchen that they have in the first restaurant. With each store that they build out, they find ways to improve not just the store layout and things like that, but how to work with third-party delivery and different vendors,” he says. “They’re always innovating with the menu. There have been some new things added to the menu since we’ve investigated the brand that they’ve tested and put on menus nationwide.”

Trujillo says he appreciates the ground-floor opportunity. His first Vicious Biscuit is expected to open in the fall in Gonzales, Louisiana. A second will follow in Baton Rouge. “We want to be part of some fun growth,” he says. “We want to help be the pioneers for companies.”

Team mindset

One of the things Melissa and Mark Overcash of North Richland Hills, Texas, like about franchising is the support they get from the corporate team. Franchisees aren’t in business alone. They’re surrounded by a network of like-minded people who share their goals. 

The pair didn’t have that kind of support when they were operating an independent healthcare business.

“Covid happened in 2020, and so in 2021, we were quite into the depths of that trauma,” Melissa Overcash says.

After researching potential businesses, they landed on Class 101, which helps high school students improve their grades, prepare for college admissions tests, apply for scholarships, and plan their futures. As part of their research, they connected with a friend from FranNet, and she also suggested Class 101. “I thought it was interesting that she felt that was a match for us without knowing that I had already previously discovered them on my own,” Melissa Overcash says.

As parents of six children, they understood the importance of education and shared a passion for helping young people find their way. “To us—I hate to say this—but it wasn’t about the college planning. It was about assisting students, mentoring them in regards to having a plan after high school, whatever that might entail,” she says, “and this model seemed to fit that passion really well.”

Profitability was important too. The pair also liked that Class 101 didn’t have any competitors in their part of Texas. A focus of their research was finding a company that could fill a niche. “We wanted it to be something that everybody was like, ‘Hey, what is this?’” she says. 

Before signing with an emerging brand, the couple needed to make sure they were comfortable with the company’s leaders, so they could trust that the support they wanted would be available when needed. The pair also learned that they could rely on their fellow franchisees. Mark Overcash says, “The negative to being your own business and having your own business model is you don’t have other groups or businesses like yours to say, ‘Hey, what are you guys doing in this situation? How are you handling it? What are the changes that you’ve made?’ It’s all on you.”

Once the pair were comfortable, they moved forward quickly. “We had the meeting in June,” he says, “and then I think we went to do our visit in September, and then I think we signed in October.”

The pair operate two locations, Class 101 Mid-Cities in North Richland Hills and Class 101 Alliance in North Fort Worth. The new location, Class 101 Flower Mound, was expected to open in July.

As they’ve grown their business, they’ve learned to appreciate another benefit of working with an emerging brand. New franchisors encounter novel situations, and the Overcashes and other franchisees can help decide the way forward.

For instance, their territories are within 30 minutes of each other. All territories have brick-and-mortar locations for regular meetings, but each territory is expected to have a large testing facility. Since students only needed to visit the testing facility two times over their two to five years of service, the Overcashes asked to use one centralized location for all three territories. The company approved.

“I’m not sure that would have been the same situation or scenario had the brand been established and not an emerging brand that’s learning along with us,” Melissa Overcash says.

A disruptor

Nicholas Marco brought considerable experience when he was thinking about going into business with an emerging brand. His father, John Marco, is a founder of Hand & Stone Massage and Facial Spa and encouraged his son’s entrepreneurial drive. 

“I’ve been so fortunate to learn through what will be the 20-year history of Hand & Stone this November. It has really prepared me well to oversee operations of other brands,” Marco says.

He owns 11 Hand & Stone Massage and Facial Spa locations in his home state of New Jersey, and he’s a regional developer for the company in Ohio where he supports 21 locations. Marco also has two open Drybar locations and another eight in the pipeline.

In addition, Marco hosts a podcast, “The Opportunity Coach,” so he can share his knowledge of the business world with others. Marco says he tends to walk into any business and wonder, “Is this a business I want to own?”

He was interested in adding a fitness brand to his portfolio and talked with different companies but never reached the point of signing on the dotted line. His experience told him conditions weren’t right.

Things changed when a friend introduced him to Sweat440 in February 2022. “She’s like a queen of fitness. She does every workout that exists,” he says. “And she lived in Miami at the time, and that is where Sweat440 started.”

Marco says he had a great workout, and he could tell Sweat440 had a solid following. He was impressed by how new classes started every 10 minutes, so members could exercise on their schedules. It took away a reason to say no. If someone missed the 7 a.m. class, they didn’t have to wait until 8 a.m.; they could start at 7:10 a.m. Marco saw how that increased flexibility for members could potentially increase revenue.

“I thought that this was a disruptor in the fitness world,” he says. “I also loved the workout, so it was enough to make me feel really excited about it.”

At the time, there were roughly 15 Sweat440 locations open. Marco says he connected with Cody Patrick, the CEO and co-founder of the brand, and that increased his comfort level. 

“In April 2023, we did the grand opening of my first Sweat440, which was definitely a huge success,” Marco says. “We opened with 275 members. I thought that was remarkable considering that nobody in the entire state of New Jersey, unless they happen to visit South Florida, knew the brand.”

As a franchisee, he’s now part of the Sweat440 team and plans to share his input as the company develops. Rather than always following the franchisor’s lead, Marco says he appreciates a collaborative relationship. 

“When you come into a very established brand, and you don’t necessarily have a connection with them, it can be a little harder. You don’t have a more direct line to the people who are involved in the decisions,” Marco says. “With a new brand, it’s a little bit easier because the team is so small. That definitely drives me. It’s a bit risky, but this is the time when they determine their destiny.”

Points to Ponder

Emerging brands offer their own mix of risks and benefits. Here are some tips from operators who decided that the potential positives outweighed the negatives: 

• “Speaking to people in franchising to help you evaluate the decision is important. I’ve learned that there’s nothing like talking to somebody who’s already walked down the path you’re about to walk down because you don’t know what to look for.”—Nicholas Marco, Sweat440.
• “Getting to know the corporate team, especially with the little experience that we have in franchising, is definitely important for us.”—Zach Trujillo, Vicious Biscuit.
• “Looking back, I would have wanted to know what the cost per acquisition is.”—Casey Furtado, Apex Leadership Co.
• “If I have a trust in that brand, I’m going to encourage people to go with the emerging brand, so it’s very easy to work with them and more cost effective.”—Hemant Patel, Cilantro Taco Grill.
• “You need patience and understanding. An emerging brand is an ever-changing process as they begin to grow. Not everybody likes change very much.”—Mark Overcash, Class 101.